Why predictable revenue generation is key to sustainable business growth

In our previous article, we discussed the concept of predictable revenue and why Aaron Ross’ model is not suitable for SMEs. In this article, we emphasise why predictable revenue generation is critical to the sustainable growth of a business. 

The value of predictable revenue generation for SMEs 

In order to survive and indeed thrive as an SME, it’s imperative that you focus on predictable revenue generation within your business.  

SMEs, compared to large businesses, are more vulnerable to peaks and troughs in their sales pipeline. This problem is compounded by the fact that as an SME, you also have limited resources at your disposal whether it’s financial or human resources.  

The common challenge is that teams get drawn into project delivery, with the business’ sales and marketing agenda taking a back seat. As a result, you are not generating and sustaining the number of leads you require to reach your target revenue and manage the flow through your sales pipeline. These troughs make SMEs more vulnerable and create revenue uncertainty. This fundamentally inhibits long term planning. It is important to have that confidence in your revenue i.e. predictable revenue, in order to plan ahead in terms of budgeting, workforce planning, future investment, etc. This requires consistent sales and marketing effort within your business and a laser focus on predictable revenue generation.  

This does not mean you have to invest heavily in a model, such as the one described by Aaron Ross, you simply cut your cloth according to your size. In effect, you need to firstly to be aware of the delivery capacity/ capability in your business. Secondly, ensure you focus on sustainable, scalable sales and marketing effort to support your delivery engine.  

Start by analysing your sales pipeline 

The starting point in this process is to first understand the nature and scale of the challenge. For that, you need to analyse your sales pipeline i.e. figure out how many leads are needed to deliver the X number of contracts needed over a period of time (read our detailed blog on that). This will involve understanding your conversion rates, at each stage of the pipeline. By analysing your sales pipeline correctly, you will be able to identify the amount of sales and marketing effort required to sustain your pipeline.  

Having analysed your sales pipeline, you’d also be able to identify the underperforming elements and the actions you need to take to improve and optimise them. By improving your conversion rates you can reduce the time, cost and resources required to convert leads into meetings, proposals into contracts, etc. If done correctly, a fully optimised sales pipeline will enable a smooth flow of leads into your pipeline. As a result, you will establish a more efficient sales and marketing engine that can achieve more by doing much less.  

For SMEs, the value of generating predictable revenue is long-term sustainable growth of the business. It is important to have a robust and efficient predictable revenue model in place that can be implemented within your resource constraints, which is sustainable and generates predictable revenue year-on-year to deliver business growth. The question then becomes; how do you implement such a model in an SME environment? In our next article, we will discuss how to develop a scalable lead generation engine within your business that delivers predictable revenue.